Wendy's 2010 Annual Report Download - page 147

WENDY’S/ARBY’S GROUP, INC. AND SUBSIDIARIES
WENDY’S/ARBY’S RESTAURANTS, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
(b) The operating profit was materially affected by impairment of long-lived assets in 2010. The impact of the
impairment of long-lived assets on net (loss) income for the first, second, third and fourth quarters of 2010, was
($7,193), ($1,497), ($16,994) and ($17,393), respectively, after income tax benefits of $4,408, $917, $10,415
and $10,660, respectively.
Net (loss) income for Wendy’s/Arby’s was also affected by income recognized in the second quarter of 2010 on
the repayment and cancellation of the DFR notes of $3,044, after income tax expense of $1,865.
(c) The operating profit (loss) was materially affected by impairment of long-lived assets in 2009. The impact of the
impairment of long-lived assets on net (loss) income for the first, second, third and fourth quarters of 2009, was
($4,266), ($4,045), ($9,627) and ($31,635), respectively, after income tax benefits of $2,614, $2,479, $5,901
and $19,389, respectively. During the second quarter of 2009, Wendy’s/Arby’s net income was impacted by
additional impairment of long-lived assets of ($1,349) after income tax benefit of $827.
(29) Guarantor/Non-Guarantor
(Wendy’s/Arby’s Restaurants)
Wendy’s/Arby’s Restaurants is the issuer of, and certain of its domestic subsidiaries have guaranteed amounts
outstanding under our 10% Senior Notes. Each of the guaranteeing subsidiaries is a direct or indirect 100% owned
subsidiary of Wendy’s/Arby’s Restaurants and each has fully and unconditionally guaranteed the 10% Senior Notes
on a joint and several basis.
The following are included in the presentation of our: (1) Condensed Consolidating Balance Sheet as of
January 2, 2011 and January 3, 2010, (2) Condensed Consolidating Statement of Operations for the years ended
January, 2, 2011, January 3, 2010, and December 28, 2008, and (3) Condensed Consolidating Statement of Cash
Flows for the years ended January 2, 2011, January 3, 2010, and December 28, 2008 to reflect:
(a) Wendy’s/Arby’s Restaurants (the “Parent”);
(b) the 10% Senior Notes guarantor subsidiaries as a group;
(c) the 10% Senior Notes non-guarantor subsidiaries as a group;
(d) elimination entries necessary to combine the Parent with the guarantor and non-guarantor subsidiaries; and
(e) Wendy’s/Arby’s Restaurants on a consolidated basis.
Substantially all of our domestic restricted subsidiaries are guarantors of the 10% Senior Notes. Certain of our
subsidiaries, including our foreign subsidiaries and national advertising funds, do not guarantee the 10% Senior
Notes.
For purposes of presentation of such consolidating information, investments in subsidiaries are accounted for by
the Parent on the Equity Method, as if Wendy’s/Arby’s Restaurants had existed as a separate legal entity by the
beginning of the earliest period presented. The elimination entries are principally necessary to eliminate intercompany
balances and transactions.
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